Blockchain of Fools?

Judging by the value of bitcoin, which recently topped $4k per bitcoin for the first time ever, interest in cryptocurrencies and the blockchain technology behind them is transitioning from underwhelming to euphoric. Once the darling of mathematicians, libertarians, and the World of Warcraft set (these are my people), cryptos have gone mainstream. A quick duckduckgo.com search for “cnbc bitcoin” yields all the necessary evidence. What explains the enthusiasm? Is this simply another inflating bubble, blown by the speculative-fervor of cheap money chasing returns? Or are cryptocurrencies and blockchain potentially historic new technologies that will revolutionize everything from our financial system to healthcare?

A Currency without Government
There are approximately 900 known cryptocurrencies as of the time of this writing. (Judging by market value, the most popular and well-established are Bitcoin, Litecoin, and Ethereum.) And though there are nuances in the implementation of the various cryptocurrencies, they all share certain properties and features:

A cryptocurrency consists of digital coins. The coins are a series of bits—numbers in a cryptographic sequence produced (‘mined’ in crypto terminology) by executing computationally-intense algorithms.

Each coin is unique, unchangeable, and resistant to counterfeiting. This is because of the mathematical nature of the algorithm that produces the coin, as well as a public verification scheme employed by most cryptos.

Coins are divisible into smaller units. For example, an owner of a coin can spend 1/10th; a second owner of that 1/10th can spend another 1/10th, or 1/20th of the original.

It is easier to produce coins early in the mining process. The algorithm is designed to get exponentially more difficult, and, consequently, the coins become more expensive to produce over time. As such, there is a practical limit to the number of coins that can ever be produced.

Cryptocurrencies are immune to currency manipulation and inflation, an important component of their appeal.

An individual can own a digital coin by signing the coin with their own unique digital signature (aka public key). If two parties transact business using a digital currency, the exchange is made public. Both the source of the coin itself, as well as the public keys of the two parties, are verified by others before the transaction is considered valid.

The source, including all owners and transactions, of all existing coins is publicly available in a large, distributed database generally referred to as the blockchain. The blockchain is peer-to-peer, meaning there is no central authority or source of truth. (The various cryptocurrencies implement this slightly differently, but with Bitcoin the entire blockchain is distributed among the various owners of the Bitcoins (Denninger).)

In addition to the distributed, incontrovertible database of transactions, blockchain gets interesting when one thinks of the applications that can be built on its foundation, “such as public or private keys, or self-executing mechanics (e.g. smart contracts)” (Das).

Decentralized Healthcare Data
Blockchain is often regarded as synonymous with Bitcoin and cryptocurrencies. This is natural, as cryptos are among the most successful implementations of blockchain technology. In fact, blockchain is being used for many use cases across multiple industries. Even in healthcare—historically a laggard in adopting new technologies—there is a great deal of enthusiasm for the promise of blockchain. Among many possible use cases for blockchain in healthcare information technology (HIT), the following are of particular interest:

In each of these use cases, the appeal of blockchain is predicated upon its promise to liberate data from particular vendors, hospitals, health systems, and governments, while maintaining built-in mechanisms for provenance, security, and privacy.

As we design and build new ways of delivering healthcare and transacting business related to HIT using blockchain technologies, we must keep in mind certain challenges and limitations:

The peer-to-peer, distributed nature of blockchain will necessarily grow very large over time. Given the rapid increase of both static storage capacity and network bandwidth with concurrent deflationary pricing, this normally wouldn’t present a problem. However, certain use cases, such as storing the blockchain ‘wallet’ on a smart phone, can create performance issues. (Certain cryptocurrencies have schemes to address this that can be replicated in HIT venues.)

The fact that smart contracts can live in applications built on blockchain doesn’t remove the needs for standards and agreed-upon protocols. Standards authorities will still be necessary to prevent constant forking, which arguably is worse than centralization of data with a dominant set of vendors.

Certain data will necessarily exist on proprietary systems and databases. The blockchain, in many cases, will contain pointers to other proprietary systems. This is not ideal, but will certainly be the case, especially during an initial transition period as standards are established and adopted.

Many concepts related to blockchain are challenging, even for power users to comprehend – and still more so for patients and clinicians who aren’t technology-savvy. For example, properly implementing a public-private key-sharing mechanism for encrypting patient data that both ensures security and maximizes user experience presents quite a challenge. This sort of problem is best addressed by creators who employ a design thinking approach, with a deep understanding of both the user and the security technologies.

This article was originally published on PointClear Solutions and is republished here with permission.

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